Correlation Between Global X and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Global X and Vanguard Emerging at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global X and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Emerging and Vanguard Emerging Markets, you can compare the effects of market volatilities on Global X and Vanguard Emerging and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global X with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Vanguard Emerging.
Diversification Opportunities for Global X and Vanguard Emerging
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global X Emerging and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets and Global X is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global X Emerging are associated (or correlated) with Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Global X i.e., Global X and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Global X and Vanguard Emerging
Given the investment horizon of 90 days Global X is expected to generate 1.06 times less return on investment than Vanguard Emerging. In addition to that, Global X is 1.12 times more volatile than Vanguard Emerging Markets. It trades about 0.1 of its total potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.12 per unit of volatility. If you would invest 6,168 in Vanguard Emerging Markets on September 1, 2024 and sell it today you would earn a total of 357.00 from holding Vanguard Emerging Markets or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Emerging vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Global X Emerging |
| Vanguard Emerging Markets |
Global X and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Vanguard Emerging
The main advantage of trading using opposite Global X and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Vanguard Emerging can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard Emerging will offset losses from the drop in Vanguard Emerging's long position.| Global X vs. Global X Variable | Global X vs. Global X Alternative | Global X vs. Global X SP | Global X vs. Global X MSCI |
| Vanguard Emerging vs. iShares JP Morgan | Vanguard Emerging vs. SPDR Bloomberg Barclays | Vanguard Emerging vs. SPDR DoubleLine Emerging | Vanguard Emerging vs. JPMorgan USD Emerging |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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